Yesterday, the 11^th Circuit Court of appeals issued
a substitute opinion in Hunstein vs. Preferred Collection & Management Services, Inc , 994 F.3d 1341
(11th Cir. 2021), which now stands in place of the original opinion. Although the substitute
opinion does not change the holding of the case, it now includes a scathing
dissent, which may pave the road for the defense of copycat cases across the
country.

On April 21, 2021, when the original opinion holding that
(a) the consumer had standing to bring the action; and (b) transmitting data to
a mail vendor is an unauthorized third-party disclosure, all three of the
judges on the panel (Newsom, Jordan,
and Tjoflat)
were united in that decision. In yesterday’s substitute opinion, Judge Tjoflat issued
a dissent that makes it clear he no longer agrees with the majority’s holding;
the tension between the majority opinion and the dissent was palpable throughout
all 65 pages of the opinion.

What happened since April that Judge Tjoflat Changed his Mind?

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Two significant events occurred after the original Hunstein opinion
was issued:

• The debt collector, Preferred Collection and Management Services (Preferred), retained new counsel and moved for a rehearing En Banc. In support of that motion, interested parties filed over twenty Amicus Briefs, including one from the Consumer Relations Consortium. (Editors Note: the original decision came from a 3-judge panel. An En Banc Motion is a request to have all judges in the Circuit hear the issues, not just the original panel of three. Amicus Briefs are briefs filed by those who are not parties to the lawsuit but have an interest in the outcome.)

•  On June 28, 2021, The Supreme Court of the United States decided TransUnion v. Ramirez, 594 U.S. ____ (2021), which held, “no concrete harm, no standing,” while providing guidance regarding what constitutes a concrete harm.

In his dissenting opinion, Judge Tjoflat explained that he
had been swayed because the original opinion “Sweeps much more broadly than TransUnion
would allow.”  Further, the dissent
cited several amicus briefs, including the brief filed by the Consumer Relations Consortium, concluding
that Mr. Hunstein suffered no additional harm beyond the statutory violation.  

Regarding the substitute opinion, Brit Suttell, an Attorney
with Barron & Newburger, P.C. and Legal Advisory Board
member who co-authored the Consumer Relations Consortium’s amicus brief, stated,

“The industry effort to sway the 11^th Circuit gained traction with at least one
judge (the dissenter) who clearly familiarized himself with all the amicus
briefs (including CRC’s – see footnote 13 of the dissent).  It’s too bad
the rest of the panel was unpersuaded.  The industry needs to be prepared
to continue to fight these claims as it is clear they are not going away.”         

Along those same lines, Jessica Klander,
Shareholder with Bassford Remele, and Legal Advisory Board member
who co-authored the Consumer Relations Consortium’s amicus brief had this to
say regarding the opinion,

“At first glance, this new opinion
looks disappointing because two of the judges refused to budge on their initial
determination and even appear to double-down. 
But upon further consideration, this new opinion contains a positive
development with the addition of a dissenting opinion. Clearly, the petition
and amici briefs changed one judge’s mind. The dissenting opinion is well
reasoned and adopts many of the industry arguments, including those from the
CRC’s brief. Hopefully, the dissent will provide fuel to get this overturned in
the future. In the meantime, the dissent provides additional support for
industry members currently defending against these claims – particularly in
jurisdictions other than the 11th Circuit.”

Key Takeaways From the Dissent:

In his dissent, Judge Tjoflat provided several arguments to support his position that the majority’s opinion was incorrect, including: 

• Transunion stands for the proposition that analyzing a case for an intangible harm sufficient for Article III standing is individualized for every plaintiff. Just because some Plaintiff’s injuries will have a common-law analogue does not mean other plaintiffs who allege a violation of the same statute will automatically have standing.  (see this article for a short primer on Article III standing)

•  The majority held that Mr. Hunstein’s alleged harm was analogous to the tort of public disclosure of private facts. This particular tort requires 1) publicity of private information, 2) that would be highly offensive to a reasonable person, and 3) that is not of legitimate public concern.  Judge Tjoflat opines that the majority opinion’s finding is incorrect because:
  

a.   “Publicity” means the matter is made public by communicating it to the public at large or to so many persons that it is substantially sure to become public knowledge, neither of which was alleged in the Hunstein complaint. The only entity to which the information was conveyed was the letter vendor.

b.   The majority opinion stated that the publicity prong was satisfied because “publicity” entails communication and Preferred’s counsel’s admitted the transmission of data was a communication. Judge Tjoflat called the majority’s reasoning “baffling,”  and went on to say, “This is like saying that sugar cookie batter is the same thing as chocolate chip cookie batter because sugar cookie batter would be chocolate chip cookie batter if you added chocolate chips.”  

c.   The majority opinion’s lack of any analysis regarding the other two prongs of the requirements for a public disclosure of private facts claim (offensive to a reasonable person and not of legitimate pulis concern) “signals the sheer misfit between sending debt collection notices through a mail vendor and the tort itself.”  He then cited examples where disclosures regarding debt were deemed not offensive and said trying to apply the third prong is “nonsensical because the public does not know anything about Hunstein’s debt. Only the mail vendor has been given access to Hunstein’s information.” 

• Congress seemed to explicitly envision the role of intermediaries, like mail vendors, in the statutory scheme. Specifically, Judge Tjoflat pointed out the verbiage in the Fair Det Collections Practices Act (FDCPA) where debt collectors are authorized to use telegrams, and states the majority “has yet to explain how a mailing vending company is any different from a telegram company.”

• If Congress had been trying to eliminate mail vendors, it has not been clear to the Bureau of Consumer Financial Protection (CFPB). Under Regulation F (Reg F), the new rules go into effect on November 30, 2021, expressly contemplate the use of mail vendors.

• Hunstein suffered no harm beyond the statutory violation.

• If the case were to reach an analysis on the merits of the claim, there is a strong argument that the mail vendor is a “medium” under the FDCPA, not a person. As such, Preferred was not communicating with the mail vendor when it sent the information, just like a debt collector is not communicating with a telegram company when it sends a telegram to a debtor. (Editors Note: the Hunstein case was reviewed on a motion to dismiss. At this stage in litigation, a court must accept all allegations in the complaint as true, and the parties are not permitted to argue the merits of the case or present evidence.)

The complete opinion can be found here. 

InsideARM Perspective:

Since April, we’ve already seen courts outside the 11^th
Circuit rule that Transunion dictates that Hunstein
copycat case consumers lack standing. As noted by Brit Suttell and Jessica Klander,
while it is disappointing that two of the three judges held firm on their
original holding, the dissent should be a valuable tool for those defending copycat
cases. In addition to providing legal arguments regarding standing, the dissent’s
inclusion of the arguments raised in the amicus briefs provides a basis for
debt collectors to raise those issues in their defense of copycat cases, and perhaps
by using this dissent as a roadmap, we will see more dismissals.

Another takeaway from this decision, particularly as the
effective date of Reg F is right around the corner, is the importance of choosing the correct
counsel for the defense of FDCPA matters. This means engaging actual FDCPA
defense attorneys, not collections attorneys who dabble in defense or attorneys
who merely advertise that they deal in “creditors rights” but have no track record.
As shown by Hunstein, the fallout from bad decisions can affect
the entire ARM industry in significant ways. Genuine FDPCA defense attorneys
are not hard to find.

The above statement is not theoretical: in the substitute
opinion, the majority once again relied on Preferred’s original counsel’s admission
that transmitting data to a mail vendor was a “communication” as defined in the
FDCPA. The only person who seems to think this admission was correct is the
person who made it; not a single FDCPA defense expert has agreed
with this contention. The admission certainly backed this case into an
unpleasant corner since the original opinion seemed to hinge on it. 

Additionally, in support of its holding that the Transunion
decision does not require the Hunstein case to be dismissed for lack of
standing, the majority cited the case of
 Lupia
v. Mericredit Inc. (Case #20-1294, 10th Cir). Lupia was a bad
case from the beginning. A debt collector attempted to argue a bona fide error
defense while simultaneously admitting on the record that it did not have policies
or procedures. After losing in the district court, despite having no fundamental
basis for a bona fide error defense, the case was inexplicably appealed to the
10^th Circuit. Since the Lupia
opinion was issued after Transunion came out, the opinion included a section on standing, which did not favor the ARM industry. As noted
when the decision came out, no good can come from appealing a bad case, and we
see the results here. Was Lupia the crux for the majority’s decision in the
Hunstein substitute opinion? No. However, it certainly provided fuel for
the fire.

This issue is important to mention at this juncture because
the effective date of Reg F is right around the corner. The ARM industry expects
a flurry of lawsuits in the initial months following the effective date. If debt
collectors do not choose their defense counsel wisely, there is a very real
possibility that we will see bad decisions regarding Reg F, which must be followed
by the rest of the industry.

October 28,
2021 is National Immigrants day. Immigrants make an impact in the ARM industry every
day. Here are two of their stories:

Aylix
Jenson- Attorney, Moss and Barnett

I
was born in Cape Town, South Africa. My
great-grandparents emigrated from Germany, Poland and Lithuania to South Africa
and avoided the Nazi persecution. Having decided to leave Poland, my paternal
great-grandfather went to the nearest port, intending to take the first
available ship. There were two ships in the port at the time. One ship was
going to Mexico and the other ship was going to South Africa. The ship to South
Africa left first. Two generations
later, my parents, older sister and I emigrated from South Africa to the United
States.

We
immigrated after a group claiming retaliation for United States attacks on
Afghanistan bombed a New York-style deli just a few miles from our family home
in Cape Town. As a child living in South Africa, I had enormous feelings of
uncertainty and insecurity, and I remember feeling incredibly relieved when my
parents told me we would be emigrating to the United States. 

Six
weeks after we arrived in the US, 9/11 occurred. I remember the feelings of fear and
insecurity were rekindled when I watched images repeatedly flashing on
television of planes flying into the Twin Towers, and the collapse of the
buildings. I began to wonder as a child where in the world I would ever be
safe.

Rebuilding
my sense of safety began when I started drawing with sidewalk chalk on the
driveway of my family’s home in Rochester, Minnesota, something I could not do
in South Africa due to high crime rates. My safety net expanded to learning to
ride a bicycle, another activity I was unable to do in South Africa. As my
world broadened and my freedom expanded, I realized that my initial fear of the
similarities between what I left in South Africa and what I found in the US
were unfounded. I recognized how lucky I was to be in the US and the endless
opportunities that were available to me and my family.

My
family was able to enter the US because both of my parents applied for the
Diversity Immigrant Visa Program. While only a small number of applicants from
around the world are successful, my mother was one of the lucky lottery
winners. I do not know how many applicants filed for the visa when my parents
entered the lottery, but current statistics indicate that there were 50,000
winners from a pool of more than 23.3 million applications.

In
February 2008, my family and I went through the naturalization process and
became citizens. June of this year marked my 20th year of living in the United
States and to this day, I remain just as grateful to be a citizen.

Amir Erez
– President and Owner, Cedar Financial Services

In
1987 my family immigrated to the United States. I was the middle child at 17,
my sisters were 11 and 22. My father had obtained a work permit here and was
employed as a mechanic experienced at repairing industrial sewing machines,
while my mother worked as a seamstress. Neither of my parents spoke English, yet still made the bold decision to
move our family to the United States. Our first home here was a two-bedroom apartment in “not the best
neighborhood” of Los Angeles. It was so small for our family that I slept on
the floor. 

Shortly after we arrived in the
United States, debt collection notices directed to my aunt were being sent to
our home. My aunt, however, did not live
with us. Because my parents did not speak English they asked me to review the
collection notices. I called the collection agency that sent them and explained
that my aunt did not reside there. I
thought that my call would be well-received, but instead a very aggressive
collector at the agency stated that opening my aunt’s mail was a federal crime
and that he would report me to “the authorities”. He immediately hung up on
me. Because my citizenship application
was pending at this time, I was terrified and angry thinking I had just
jeopardized my opportunity to become a U.S. citizen by trying to do the right
thing.

After college, I decided to open my
own collection agency, Cedar Financial. I vowed that I would never allow the
use of false threats or abuse to collect money at my agency. My agency would put people first. In the early
days of Cedar Financial, I would travel up and down Pico Boulevard in Los
Angeles, knocking on doors of merchants and offering to collect their bad
checks. Eventually, we were retained by
several major corporations to provide nationwide collection services. 

Today
Cedar Financial is one of the largest collection agencies in the nation,
celebrating 30 years of successful representation for creditors across the
globe. We are incredibly proud of our
track record of empowering immigrants and first-generation Americans, both as
clients and co-workers. Cedar Financial
understands first-hand the depth of hard work and responsibility necessary for
success as a first-generation citizen of the United States, and we welcome
those individuals who have successfully made the legal immigration journey as
clients, friends, and co-workers.    

CLAYSBURG, Pa. — NPC, Inc., (NPC) Owner and Chairman of the Board, Mark Barnhart, was recently presented with the Lifetime Achievement Award in Business Excellence by the Blair County Chamber of Commerce. This honor recognizes an individual who has been regarded as a business leader in Blair County for at least twenty-five years and who has positively impacted the local business community. 

As the 19th recipient of the award, Barnhart was selected by a committee comprised of members of the Chamber’s executive committee, staff, and past award recipients. Barnhart’s family, colleagues, and business partners gathered to pay tribute on October 18, 2021, during the Chamber’s annual Business Excellence dinner at The Casino at Lakemont.

Chip Gallaher, NPC Chief Executive Officer, said, “Managers do things right; leaders do the right thing. That’s Mark. Mark rarely manages, but he leads 24 by 7 and 365 days out of the year.”

As a second-generation owner of NPC, Barnhart has been the visionary behind the company’s continued growth since purchasing the business from his parents in 1987. Under his leadership and guidance, NPC has transformed from a traditional printing company into a full-service print, mail, and related communications. The company currently employs nearly 500 individuals in Blair County and surrounding communities.

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New Pig Corporation Chairman and Co-Founder Ben Stapelfeld explained, “To Mark Barnhart, running a business is just a medium used to build experiences for others. Although his business successes have been significant, and there are many, they pale in comparison to the adventures and opportunities he has created for other people.”

A visible leader in the local community, Barnhart dedicates much of his time to mentoring and advising young entrepreneurs and start-up companies. He is also a supporter of the Blair County Chamber of Commerce. Additionally, Barnhart contributes charitably to local organizations, including food banks, libraries, YMCAs, educational foundations, and efforts that benefit law enforcement and military veterans.

“I’ve never been comfortable with the use of the word ‘I,’” said Barnhart. He explained, “It will always be a ‘we thing’ to me. Any of our success is tied to the quality of our people and the sum of their commitment, hard work, an abundance of favorable circumstances. I can’t thank the Chamber enough for providing me the opportunity and platform to tell you about NPC and share this honor with the many people who have been a part of our story.”

Today, Barnhart has transitioned into an oversight role as chairman of the board. His focus on customer and market expansion, recruitment, and the development of the company’s current and future leadership team will continue to position NPC for long-term success.

About NPC, Inc.

Privately owned and operated for over six decades, NPC, Inc. is a leader in delivering integrated solutions for the print and mail industry. By combining innovative processes, secure workflows, and operational expertise, NPC offers simplified solutions to the management and dissemination of business-critical communications programs for government and commercial sectors. Learn more at www.npcweb.com.

CFPB Director Rohit Chopra has wasted no time
in acting on comments he made at his confirmation hearing regarding the risks
posed by the collection of data by large platforms.  In just his first
full week as CFPB Director, the CFPB sent orders to six technology platforms offering payment
services directing them to provide information to the
Bureau.  The orders were issued as market monitoring orders under the
Dodd-Frank Act, which directs the Bureau to monitor for risks to consumers in
the offering or provision of consumer financial products or services and
authorizes the Bureau to require covered persons and service providers to
provide information needed to perform such monitoring.

In his statement about the orders, Director
Chopra raised numerous concerns about Big Tech companies’ use of the data
collected on their payments platforms.  He indicated that the CFPB’s
inquiry “will help to inform regulators and policymakers about the future of
our payments system” and “will also yield insights that may help the CFPB to
implement other statutory responsibilities, including any potential rulemaking
under Section 1033 of [Dodd-Frank].”  (Section 1033 requires consumer
financial services providers to give consumers access to certain financial
information and is the subject of an Advance Notice of Proposed Rulemaking issued
by the Bureau in October 2020.)

The orders require responses by December 15,
2021.  However, in light of the breadth of the information requested, it
would not be surprising for the recipients of the orders to seek additional
time to respond.  The orders request detailed information about the
following:

• The information sought relates to specific payment “products” offered by the “company.”  The orders’ definition of “company” includes any parent companies, wholly or partially owned subsidiaries, unincorporated divisions, joint ventures, operations under assumed names, and affiliates.  The definition of a “product” is any “C2C and/or C2B payments product or services the company offers or provides to consumers, as well as any product or service the company offers or provides to consumers in connection with facilitation of C2C and/or C2B payments, including funds-loading or other fund-receiving transactions made primarily for personal, family, or household purposes that are not C2C or C2B transactions.  “C2B” means consumer to business payments made primarily for personal, family, or household purposes so long as the transaction involves a U.S.-based consumer (but business parties do not need to be in the U.S. for a transaction to be covered and transactions in or enabled by cryptocurrency are included.)  “C2C” means both domestic U.S. payments made by one consumer to another consumer and payments from consumers in the U.S. to consumers outside the U.S. that are made primarily for personal, family, or household purposes (and includes transactions in or enabled by cryptocurrency.)

• Data harvesting.  The information sought relates to “Direct Product Data” and “Indirect Product Data” and the kinds of data that the company generates from this data.  “Direct Product Data” means data that the company has collected (and maintained) as a result of consumer’s use of a product.  “Indirect Product Data” is data that is both (1) generated, at least in part from Direct Product Data, and (2) about individual consumer users or commercial users of a product.  (A commercial user is the non-consumer party that accepts payments from consumers or otherwise makes use of a product to engage in financial transactions with consumers.)

• Data use and monetization.  The information sought relates to how the company monetizes Direct and Indirect Product Data, including by improving service delivery to product customers, selling the data, and selling advertising or other targeted content based on attributes derived from the data.

• Access restrictions.  The information sought relates to the company’s policies for managing access to products for consumers and commercial entities, whether, and if so how, the company encourages or requires users of other company products or services to use a “product,” and how the company manages third-party involvement in product delivery.

• Consumer Protections.  The information sought relates to how the company addresses various aspects of consumer protection, including disclosures and other protections with respect to data practices about a product, detection of fraudulent activity, methods for consumer users to address issues and problems concerning a product, and any accompanying compliance obligations under federal consumer financial laws and applicable Bureau regulations.

• Usage data/metrics.  Product-use metrics and related information is sought, including metrics on complaint-handling.

• Organizational structure.  Information is sought about the company’s organizational structure as it relates to products.

The Bureau’s issuance of the orders was
praised by the Consumer Bankers Association.  In its statement about the orders, CBA
applauded the Bureau “for advancing the Bureau’s mission of protecting
consumers in the rapidly evolving financial marketplace,” observing that
“[s]ince the Bureau was founded, a growing share of banking activity has
occurred outside of the purview of leading regulators, putting consumers and
the resiliency of the financial system at risk.”   CBA reiterated its
long-standing support for “ a level playing field to ensure every American
family receives the protections they deserve, regardless of where they go to
meet their financial needs.”

On October 18, 2021, the CFPB released a Spanish translation
of the Model Validation Notice found in Regulation F (“Reg F”). Per the CFPB,
this translation is a “complete and accurate Spanish translation of the Model
Validation Notice found in Appendix B of Reg F.

A debt collector who uses this notice, and has also provided
the consumer with the model English-language version, will be covered by the safe
harbor protections afforded by Reg F (See Comment 1006.34(e) – 1). The
translated version includes the same optional disclosures seen in the English
language version, except for the Spanish-language disclosure, which appears on the
English-language version and advises the consumer of their right to receive a Spanish
translated version.

The translated version
of the model validation notice can be found here.

ORCHARD PARK, N.Y. — Orion
Capital Solutions, LLC proudly volunteered
their time to help clean up the Boca Grande Beach in Boca Grande, Florida on
Saturday, September 21, 2021. With Gasparilla Vacations co-hosting the Keep Lee County Beautiful event, six team members worked all day with various
volunteers to pick up trash and clean up the famous beach on the other side of
the bay from Fort Myers, Florida. 

Kristin
LoVallo, Orion Capital Solution’s Director of HR/Compliance, had this to say on the team’s involvement: “We are so
proud of our team for getting out there, volunteering their time, and
contributing to the amazing work that goes into the Lee County beach cleanup.
We work every day to ensure our clients can continue to live a healthy
financial life and we want to provide that same effort and initiative to the
community we share with our consumers. The Orion team is proud to have
cultivated an amazing culture that promotes and fosters both community
involvement and professional development.” 

A Monumental Effort

The Orion team headed out to Boca Grande on International
Coastal Clean-Up Day (ICC) – the 31st year of the
international effort. Every September, ICC has encouraged over nine million
people from around the world to clean up nearly 300,000 miles of coastline and
pick up over 144 million pounds of trash. 

Kristin adds: “As leaders in the receivables management industry,
we had to do our part to influence the change we wanted to both be and see in
our community. Our team is glad to help promote Keep Lee County Beautiful and
motivate both our staff and our community to not only help clean up the spaces
we live in but also continue to influence others to be better stewards of the
beaches we all love and enjoy daily.” 

Since 2017, Keep Lee County Beautiful has signed up over 17,000
volunteers, removed over 156,000 pounds of litter and debris, hosted over 750
events, and planted 32,500 plants, gardens and trees. 

A Culture Of Change

The company’s mission is to provide trusted debt collection
services to creditors while offering consumers accessible and achievable
payment options leading towards a safe and secure financial future; the Orion
team could not achieve those goals while ignoring the communities they share
with consumers. 

Orion Capital Solutions is proud to support not only Keep Lee
County Beautiful, but also work closely with organizations like Southtowns YMCA, the Boys and Girls Club of Orchard Park, the Baker Victory Services,
St. Jude’s Hospital, and the Ronald McDonald
House. Their approach of balancing smart, integrated
technology while remaining courteous and compassionate with consumers is
fostered through these organizations and their amazing staff’s daily efforts to
improve the lives around them.

About Orion Capital Solutions, LLC

Orion
Capital Solutions, LLC is a professional, nationally
licensed collection agency headquartered in Orchard Park, New York. Founded in
2018, they provide outstanding services to clients and consumers through the
integration of technology and an experienced and compassionate team. The team
has over 30 years of experience in delivering exceptional results for creditors
and realistic solutions for consumers.